by OrangeTee & Tie Pte Ltd.

Private home prices expected to rise this year after 2.5% gain in 2019

URA Quarterly Data

Q4 2019

Singapore, 01 Jan 2020

Overview of Price Trends

Private home prices rose again for the third straight quarter, rising by 0.3 per cent for the third quarter of this year from the previous three-month period, according to flash estimates released by the Urban Redevelopment Authority (URA). The pace of increase eased further from the 1.3 per cent price growth in the third quarter of this year. For the whole of 2019, prices rose 2.5 per cent which is within our original forecast of 1 to 3 per cent for the whole year. 

Why prices are rising at a slower pace?

The slower pace of price increase was mainly attributed to a dip in prices of non-landed homes in CCR by 3.7 per cent and RCR 1.4 per cent quarter-on-quarter. 

For CCR, the price decline could be attributed to fewer super-luxury homes or higher-priced units being transacted in the reviewed quarter. According to URA data downloaded on 30 December 2019, 57.6 per cent of non-landed private homes (all sales types) in CCR were above S$2 million in Q4 2019, whereas this percentage was higher in Q3 (61.8 per cent) and Q2 (63.4 per cent). By PSF range, 12.9 per cent of non-landed private homes in CCR were sold above S$3,000 psf in Q4 2019 whereas 20.3 per cent were sold in this psf range in Q3 2019 and 21.6 per cent in Q2 2019. This could be due to a lack of super-luxury new launches in the final quarter of last year. In comparison, new projects like Boulevard 88, 3 Cuscaden and RV altitude were launched in the earlier part of 2019 or final quarter of 2018 which could have boosted sales in the second and third quarters of last year.  

On a similar note, there were fewer non-landed private homes in RCR transacted at a higher psf range of above S$2000 psf in the final quarter of last year (14.8 per cent) when compared to Q2 2019 (22.1 per cent) and Q3 2019 (27.9 per cent) which may explain why there is a quarter-on-quarter decline in prices in Q4 2019. 

Outlook for 2020

As we approach the dawn of a new decade, we remain sanguine about the private residential market. While the market will undoubtedly be influenced by the wider economy, several factors like the easing of trade tensions, interest rate cuts, positive employment numbers, and strong income growth will continue to sustain demand and boost buyers' confidence. 

Being one of the busiest years over the past decade with more than 50 new project launches and over 10,000 new homes being launched for sales last year, we anticipate that between 9,500 and 10,000 new homes could be transacted for the whole of 2019. 

While fewer projects could be launched this year, especially mega-projects above 1,000 units, we remain positive about the private residential market for 2020.  The market may see more executive condominium (EC) units being sold as more than three projects are slated to be launched and the demand will likely rise since the income ceiling for EC buyers has been raised from S$14,000 to S$16,000. We may also see more luxury home sales as there is a slightly higher proportion of luxury project launches this year. 

We anticipate that a similar number of between 9,000 and 9,800 new homes could be sold this year. Sales are expected to remain robust for ongoing project launches and buyers sitting on the sidelines may enter the market now since prices have been rising steadily over the past few quarters. We anticipate that overall prices may continue to grow between 1 and 3 per cent for the whole of 2020. 

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